The "highly competitive" US Internet market will only get better, Comcast said.

Comcast this morning confirmed reports that it has struck a deal to buy Time Warner Cable for $45.2 billion in stock, a merger that was blasted by consumer advocates and is sure to receive antitrust scrutiny.

But not to worry, Comcast says—this merger is actually "pro-consumer," and the US cable TV and Internet markets are so "highly competitive" that the Department of Justice and Federal Communications Commission should wave it through.

"While we believe that this transaction is, and will be determined to be, pro-competitive, pro-consumer, and strongly in the public interest when we make our case and seek approval from federal regulators, we recognize that certain competitive concerns might be raised about consolidation of these assets under one roof," Comcast said in a fact sheet. "But we strongly believe that these competitive concerns are already addressed, not only by the highly competitive marketplace in which the new company will vigorously compete for subscribers, but also by existing rules and regulations."

Comcast noted that the deal would bind Time Warner to net neutrality obligations Comcast made when it acquired NBCUniversal. To get that deal approved, Comcast agreed to follow the terms of the FCC's Open Internet Order for seven years regardless of whether that order was overturned in court.

Further Reading

The FCC's anti-blocking and anti-discrimination rules were indeed vacated this year, making that agreement more than just a side note. Comcast purchasing Time Warner would bring "the automatic application of certain NBCUniversal Conditions to the cable systems and related assets acquired from Time Warner Cable," Comcast said. "The FCC’s Open Internet protections will be extended to millions of additional broadband customers, irrespective of whether the FCC re-establishes such protections for other industry participants." Comcast confirmed to Ars, "[w]e agreed to live under all of the FCC’s Open Internet Rules, all would be extended to the Time Warner Cable broadband subscribers."

Those obligations will be lifted in 2018, though. Comcast has also more aggressively adopted data caps than Time Warner, so a merger could expand the number of customers who are penalized for going over download limits. Consumer advocacy groups Public Knowledge and Free Press argued last night that antitrust regulators should squash this merger.

"If Comcast takes over Time Warner Cable, it would yield unprecedented gatekeeper power in several important markets," wrote Public Knowledge Senior Staff Attorney John Bergmayer. "It is already the nation's largest ISP, the nation's largest video provider, and one of the nation's largest home phone providers. It also controls a movie studio, broadcast network, and many popular cable channels. An enlarged Comcast would be the bully in the schoolyard, able to dictate terms to content creators, Internet companies, other communications networks that must interconnect with it, and distributors who must access its content. By raising the costs of its rivals and business partners, an enlarged Comcast would raise costs for consumers, who ultimately pay the bills. It would be able to keep others from innovating, while facing little pressure to improve its own service. New equipment, new services, and new content would have to meet with its approval to stand any chance of succeeding. What's more, it is simply dangerous for a large proportion of our nation's critical communications infrastructure to be in the hands of just one provider."

In an already uncompetitive market with high prices that keep going up and up, a merger of the two biggest cable companies should be unthinkable. This deal would be a disaster for consumers and must be stopped.

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Comcast will have unprecedented market power over consumers and an unprecedented ability to exert its influence over any channels or businesses that want to reach Comcast's customers.

No one woke up this morning wishing their cable company was bigger or had more control over what they could watch or download. But that—along with higher bills—is the reality they'll face tomorrow unless the Department of Justice and the FCC do their jobs and block this merger. Stopping this kind of deal is exactly why we have antitrust laws.

Americans already hate dealing with the cable guy—and both these giant companies regularly rank among the worst of the worst in consumer surveys. But this deal would be the cable guy on steroids—pumped up, unstoppable and grasping for your wallet.

Comcast will give up some customers to appease regulators

Comcast said it would divest three million subscribers to appease regulators but gain eight million even after the divestitures, "bringing Comcast’s managed subscriber total to approximately 30 million." Comcast did not say which markets it would give up in order to divest three million subscribers or which company it would sell to.

Upon hearing of the transaction, Free Press said it "would give Comcast control of more than a third of the US pay-TV market and more than half of the US triple-play market for video, voice, and Internet service." The divestitures would bring Comcast under 30 percent of the multi-channel video market. The FCC formerly limited cable providers to no more than 30 percent of the overall video marketplace, but that rule was thrown out by a court in 2009.

In addition to getting Time Warner, Comcast said it "will acquire DukeNet Communications and Time Warner Cable's two regional sports networks in Los Angeles, its 26.8% stake of Sterling Entertainment Enterprises, LLC (doing business as SportsNet New York), and its 52 news and local programming channels, including Time Warner Cable News NY1 in New York City."

Time Warner customers should be jumping for joy, Comcast said, as the acquisition "will also result in the accelerated deployment of advanced technology and the development of new and innovative products and services for millions of customers." Significant cost savings and efficiencies due to the merger "will ultimately benefit customers," although Comcast didn't say it would lower prices.

"Scale enables better customer experiences as demonstrated by Comcast," the company said. "Comcast’s scale has enabled the company to create industry leading products like the X1 Entertainment Operating System, increased Internet speeds, comprehensive communications and digital phone products and features, and home management. The national scale created by this merger will improve Comcast’s ability to compete against its national competitors like DirecTV and DISH, as well as telcos like Verizon and AT&T."

In addition to residential markets, Comcast said that buying Time Warner will improve its ability to offer backhaul to wireless carriers and services to enterprises.

"In addition, Comcast will be able to bring to Time Warner Cable business customers enhancements to their package of services that Time Warner Cable does not offer (e.g., hosted voice)," Comcast said. "Many of the cable systems being acquired by Comcast 'fill-in' gaps in our existing service area and add service areas in New York City and Los Angeles. This transaction will be particularly meaningful to super regional businesses (in the NYC, LA, and other markets) with facilities or offices that span both the Comcast and Time Warner footprint. Until now, these regional businesses have not been able to benefit from seamless products and services and previously may have had two accounts. This transaction will provide many operational and cost efficiencies to these businesses. The new additional markets will also allow for synergies and enhanced investment returns, thereby promoting further development of these competitive services."

The merger will not reduce competition, the company said. Since Comcast and Time Warner Cable haven't bothered to compete against each other in any individual markets, "there will be no change in market share in local markets for video, high-speed data, and voice."

Customers have options from satellite, Verizon FiOS, AT&T U-verse, and Google Fiber, proving that the overall market is a competitive one, Comcast said.

"A number of online businesses like Apple, Google, Amazon, Hulu, Netflix, and a host of smaller companies are entering the online video space and trying to position themselves as competitors," Comcast said. "While we view online businesses as complementary to our business, previous antitrust concerns about further cable consolidation are truly antiquated in light of today’s marketplace realities."

In any case, there is already "a wide array of FCC and antitrust rules and conditions from the NBCUniversal transaction in place that more than adequately address any potential vertical foreclosure concerns in the area of video programming," the company said.

Comcast said the acquisition did not include a break-up fee, saying the lack of one reflects its confidence that the deal will be approved. Regulatory review is expected to take 9 to 12 months. Comcast and Time Warner combined reportedly spent $25 million on lobbying in 2013.

For all of Comcast's optimism, the proposed deal will be scrutinized by regulatory agencies that forced AT&T to give up on its dream of acquiring T-Mobile three years ago. Between the Open Internet Order being vacated and Comcast/Time Warner, we're about to get a sense of the regulatory intentions of FCC Chairman Tom Wheeler—who, in one of his previous jobs, headed up the cable industry's top lobbyist group.

Tim Karr of Free Press argued that "Comcast's plan to gobble up TWC should give Wheeler yet another good reason to reclassify ISPs as common carriers," which could let the commission reinstate its net neutrality rules.

The Public Knowledge statement used in this story has been corrected. Comcast is not the country's largest phone provider.

Promoted Comments

Separate Content from Connection. No company providing connections should be in the content business. Comcast operates under a conflict of interest - remove the conflict, make them choose, content or connection but not both!

They might have let the Comcast- NBC merger through, but I have a really hard time seeing this one being allowed.

I just don't see how anti-trust regulators let it happen.

I was thinking just the opposite, sadly. Everyone was asleep at the switch when they acquired NBC. I don't see anyone waking up for this little old thing. In fact, with all the animosity towards TWC, I suspect regulators will be happy to see TWC gone by any means.

They weren't asleep at the switch. Never forget that it was a corrupt Bush official that approved this, then was HIRED BY COMCAST. NEVER FORGET that the Republicans did nothing about this, because they have no honor and no faith.

Remember these deals are done by real greedy people who should be held accountable for hurting the nation in favor of their own personal gain. They're defending corruption, not capitalism.

We don't have to approve this deal. We don't have to have broadband monopolies. We don't have to pay higher prices every year for the same cable services. A lot of greedy politicians allow this to happen every year, and they are almost all millionaires who directly benefit from their votes. We need to stop voting for them.

It was a Republican who built the Interstate Highway System and offered it for free, funded by the federal gov't. That was a huge part of infrastructure that built the best economy in history. Now we have immoral Republicans like Meredith who sacrifice other people to make sure they can cash in. This is a large part of why the economy is set for another crash.

I'm all for this merger. With the provision that Comcast has to build fiber to subscriber homes and after 2-3 years make that available to any other business that wants to run an ISP at an actual reasonable price.

Sorry man, but that's just fantasy. Even if such provision were agreed to you know they will find a way to get out of it. They have entire floors filled with lawyers whose top priority is to thwart any hint of competition. And then they can fall back on lobbyists and suitcases full of cash...

They might have let the Comcast- NBC merger through, but I have a really hard time seeing this one being allowed.

I just don't see how anti-trust regulators let it happen.

"If you don't let us merge, TWC will have to dissolve and leave millions of households without service."

EDIT: Oh, and the NBC one happened 'cos the person who approved it at the time left the FCC and got a position at Comcast almost as soon as the ink was dry. Wouldn't be surprised to see that happen here, as well.

I'm all for this merger. With the provision that Comcast has to build fiber to subscriber homes and after 2-3 years make that available to any other business that wants to run an ISP at an actual reasonable price.

Sorry man, but that's just fantasy. Even if such provision were agreed to you know they will find a way to get out of it. They have entire floors filled with lawyers whose top priority is to thwart any hint of competition. And then they can fall back on lobbyists and suitcases full of cash...

Oh I know how unlikely it is. But I feel it is one of the most likely solutions to getting fiber to the majority of homes in the US.

I'm all for it. If they said it will improve my life well then I'm sure they mean it. Plus the data caps I'll face that I didn't under Time Warner will just force me to focus on the important things in life that might exist not on the Internet (I might find some).

Customers have options from satellite, Verizon FiOS, AT&T U-verse, and Google Fiber, proving that the overall market is a competitive one, Comcast said.

The fact that the general populace will actually buy this crap w/o a moment of critical thought really makes me wonder how we have survived to become the dominant species on the planet.

You might as well be mentioning dial-up as viable competition if you're going to bring up satellite. U-verse is not available everywhere. FiOS is not available everywhere AND is getting no more rollout. Google Fiber... Well the gall in mentioning Google Fiber as "competition" when it is available in a whopping ONE city w/only two more currently slated for rollout is amazing. Whoever wrote this PR piece has to set off metal detectors whenever they go to the airport with the kind of steel balls it takes to say this bull.

Listing the options spread out across the entire country as "competition" is so intellectually dishonest that it makes me question my commitment to freedom of speech (which is normally very strong). It is like saying there is "competition" in state governments because there are a whopping 50 to choose from. Sure, it's technically true, but you have to uproot your entire life to in any way take advantage of said "competition," which makes it a completely non-viable option for the majority of people.

I'm all for it. If they said it will improve my life well then I'm sure they mean it. Plus the data caps I'll face that I didn't under Time Warner will just force me to focus on the important things in life that might exist not on the Internet (I might find some).

I'm all for it. If they said it will improve my life well then I'm sure they mean it. Plus the data caps I'll face that I didn't under Time Warner will just force me to focus on the important things in life that might exist not on the Internet (I might find some).

Like women.*

*Oh wait. They're on the internet too!

There's 3 in my house already, but a reliable connection to watch hockey games would really do the trick.

"Hmm, what will be the consequences of this highly uncompetetive and damaging merger to the consumer? Oh I know, lets lie! Miller time."

We are already suffering the worst effects of low competition because of region lock. A merger just puts more regions in a single hand, and actually could create some economies of scale that would be beneficial to the consumer.

There are still content/provider issues that this could exacerbate, which would definitely be the focus the AG and FTC I would think (hope). But otherwise, there is little downside to the consumer, because we are already experiencing the downside.

Also, it may be easier to regulate or break up a single large provider conglomerate (ala. BT in the UK or Mama Bell in the early 80s) and change the regulatory landscape that way, than it would be to deal with myriad medium sized providers (e.g. Comcast, TWC, Cox, Charter, RNC, etc.).

If the merge goes through, I guess internet service in US will look similar here in Canada:Rogers: $54.99 for 25M/2M with 80GB monthly data cap.

Here in Nova Scotia, it's Easlink with 20/2mbit for $70. No cap, though. (that's at the next tier up, which is $90 or $100, I forget 'cos I've no interest in those - but even then, I think it's like a 200GB cap; at $60 we get 10/1, capless)

Not going to do the "no problems here" shuffle, but I will say that I'm on Comcast Business, and have been for 2 years. 50/10 and no Netflix or any slowdowns on anything. No data-caps either of course and they leave you alone. But then again, I'm also paying much more than a consumer line.

Is Comcast reading the tradewinds? So if ISP's are reclassified as common carriers and are regulated as such, Comcast's overall profits are likely to go down (but they will still remain quite profitable). So, maybe they're buying TWC in anticipation of this, so overall revenue will remain the same.

Is Comcast reading the tradewinds? So if ISP's are reclassified as common carriers and are regulated as such, Comcast's overall profits are likely to go down (but they will still remain quite profitable). So, maybe they're buying TWC in anticipation of this, so overall revenue will remain the same.

It is too much to hope that ISPs will indeed be reclassified?

Maybe. I think they would fight tooth and nail to avoid that fate though.

There were some issues but the consumer benefited greatly from it. Believe it or not you had to lease your actual telephone handset from the phone company when I was a kid. (You could also kill a bear with one if it entered your home)

If the merge goes through, I guess internet service in US will look similar here in Canada:Rogers: $54.99 for 25M/2M with 80GB monthly data cap.

Here in Nova Scotia, it's Easlink with 20/2mbit for $70. No cap, though. (that's at the next tier up, which is $90 or $100, I forget 'cos I've no interest in those - but even then, I think it's like a 200GB cap; at $60 we get 10/1, capless)

I don't know about Eeslink, for myself I am also using a small local ISP(Teksavvy). The price is $45 for 25M/2M with 300GB cap. But it's at the mercy of the big two: Rogers and Bell. A coworker formerly using teksavvy was without internent for over 2 weeks. He had no choice but going to Rogers...

I would love it if the article authors/editors provided means of action for people who oppose these types of things. Who do I call, write, or e-mail? What actions can I take as a vested citizen in helping prevent this atrocity?

I would love it if the article authors/editors provided means of action for people who oppose these types of things. Who do I call, write, or e-mail? What actions can I take as a vested citizen in helping prevent this atrocity?

Someone please kill this deal. I have Time Warner now and while I do not like Time Warner they're the second best ISP I've ever had. I've had 7 technicians out and been through 4 modem replacements in 14 months. I've made 24 calls for loss of service, and lost service about 30 times. I find Time Warner's prices for cable ridiculously high $30 extra to bundle 20 channels some of which I suspect pay Time Warner for service. (I subscribe to Netfix for $8 and watch what I please when I please) That said Comcast was worse. I paid for business class service with them, $140 a month for the exact same service they provided a residence next door to my office for $35. It took them 4 installation attempts to install the cable properly, and they never had the right tools for the job. I lost service more than 10 times in five months and went through 2 modems. Now that I've moved my business to a location they serve but refuse to install at (even for their customary $300 business install fee) they insist I owe them $700 for service they refused to provide.

Wide Open West of WOW was the best ISP I ever had doing a costly install free and they had 3 outages in 18 months of service with no need for modem or box swaps.This deal would be bad for me, and bad for competition. I believe it would lead to stagnation in the already poorly functioning ISP market in the USA. Further I use 1TB worth of data on a 15/1Mb line and Comcast would want to cap that at 250GB. I'm not a glutton, that number I expect could be more than 2TB.Time Warner has been good to it's users not turning over private info such as IP address without a proper court order, and not throttling services.

Time Warner has tried caps before and only backed down because their financial statements showed more data delivered for less cost per unit of data and less cost overall than the year before, thereby showing them to be liars when they said caps and overages were financially necessary. I'm certain under Comcast we'd see caps.